Currency depreciation worsens terms of trade for agricultural economies Steps:

• Recall terms of trade (TOT) formula: TOT = (export price index / import price index) × 100; deterioration means TOT falls.
• Identify agricultural economies export primary goods and import manufactures.
• Analyze how exchange rate changes affect prices in domestic currency.
• Evaluate each option's impact on TOT.

Why A is correct:

• Falling exchange rates (depreciation) raise import prices in domestic currency while export prices remain stable, lowering TOT per the standard TOT formula.

Why the others are wrong:

• B: Increasing manufacturing productivity lowers import prices, raising TOT (improvement).
• C: Agricultural productivity gains lower export prices but often matched by demand, not necessarily deteriorating TOT.
• D: Foodstuffs have low income elasticity (Engel's law), so high elasticity would not cause deterioration.

Final answer: A